Crude oil storage tanks are seen from above at the Cushing oil hub, appearing to run out of space to contain a historic supply glut that has hammered prices, in Cushing, Oklahoma, March 24, 2016.
Crude oil storage tanks are seen from above at the Cushing oil hub, appearing to run out of space to contain a historic supply glut that has hammered prices, in Cushing, Oklahoma, March 24, 2016. Reuters / Nick Oxford

Oil tumbled over 3% on Tuesday, retreating from a seven-year high after Russia said some of its military units were returning to their bases following exercises near Ukraine, a move that appeared to de-escalate tension between Moscow and the West.

It was not clear how many units were being withdrawn, and by what distance, after a build-up of an estimated 130,000 Russian troops. An earlier Interfax report on the troop movements had prompted oil to extend losses.

"The situation is very fluid, but today is definitely a calmer day," said Robert Yawger, executive director of energy futures at Mizuho. "It's going to be a minute-to-minute, day-to-day type of thing."

Brent crude fell $3.20, or 3.3%, to settle at $93.28 a barrel. U.S. West Texas Intermediate (WTI) crude fell $3.39, or 3.6%, to end at $92.07 a barrel.

Both oil benchmarks hit their highest since September 2014 on Monday, with Brent touching $96.78 and WTI reaching $95.82. The price of Brent jumped 50% in 2021, while WTI soared around 60%, as a global recovery in demand from the COVID-19 pandemic strained supply.

The latest Russia-Ukraine development drew a cautious response from Ukraine and Britain, after days of U.S. and British warnings that Moscow might invade its neighbor at any time.

On Tuesday, Ukraine said its defense ministry and two banks had been subject to a cyber attack, appearing to point the finger at Russia.

Investors are also watching talks between the United States and Iran on reviving Tehran's nuclear deal with world powers, which could potentially allow for increased Iranian oil exports.

Russian Foreign Minister Sergei Lavrov spoke to his Iranian counterpart Hossein Amirabdollahian on Monday, and they noted a "tangible move forward" in reviving the Iran nuclear deal, Russia's foreign ministry said.

Underlining the tight supply and demand balance, U.S. crude stockpiles fell by 1.1 million barrels for the week ended Feb. 11, according to market sources citing American Petroleum Institute figures on Tuesday. Gasoline inventories fell by 923,000 barrels while distillate stocks fell by 546,000 barrels. [API/S]

U.S. government data on inventories is due on Wednesday.